Finance Minister Nirmala Sitharaman presented her first paperless union budget. Ms. Sitharaman has said that the Budget 2021-22 is likely to see a massive public sector investment and expenditure push.
By considering this new budget in mind, T3FS come up with travel trade leader’s opinions on the budget with respect to “TOURISM”.
Nakul Anand, Chairman-FAITH (Federation of Associations in Indian Tourism & Hospitality) claimed that lack of immediate direct support in budget disappoints Indian Travel & Tourism industry and said “FAITH the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) & cause partner AIRDA was looking forward to the Union budget Fy 21-22 with great expectations. “lack of immediate direct support in the budget has disappointed the Indian travel and tourism industry.
The union budget laid out budget proposals for enhancing rail, road, ports, metro lite infrastructure & PPP in buses, airports & ports including vista coaches in tourist routes. These infrastructure measures may boost tourism over the long term but only once they are implemented. The measures to change the small companies’ capitalisation and turnover and support to single person company may boost the micro & small tourism entrepreneurs in boosting their organised state. However, the new agri infra cess will be a further dampener.
However, the tourism, travel & hospitality industry was looking at support for immediate and short-term measures for critical revival. This has not happened in the budget announcements.
While infrastructure measures announced as budget announcements may boost tourism over the long term, the opportunity for immediate support has regretfully been missed out.
To ensure that there was an immediate national common tourism vision & revival action plan, post-COVID across the centre & state, FAITH had proposed the creation of a National Tourism Council of Chief Ministers headed by the PM along with the tourism minister.
There was an immediate need for common industry status across the country for the complete tourism industry by putting it in the concurrent list to organise the industry and make them post COVID ready.
To ensure that the export potential of Indian Tourism would have been realised post COVID tourism industry should have been fully recognised at par with merchandise exports, export earnings from tourism should have been made tax free and also the incidence of taxes in tourism earnings should have been zero rated.
SEIS of 10% to all foreign exchange earning members in tourism should have been made applicable for 5 years to ensure a post COVID recovery. The SEIS for 2020-2021 should have been released in a Global Mice Bidding Fund was required to have been set up with ? 500 crores to restart immediately and double India’s mice share.
To communicate a tourism ready India, Indian missions abroad in each country should have been activated with tourism resources for maximum reach.
There was a need of a Corpus of at least ? 2500 crores for global branding budget to enable Sub Branding of three Tourism segments Indian MICE, Indian adventure, Indian Heritage under the Incredible India main brand to enhance each of these verticals’ global outreach.
Post COVID to ensure that the tourism industry would have become a mainstay domestic industry there was required an income tax exemption on travelling within India income tax credits for upto ? 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country.
To generate post COVID corporate travel resumption it was required to incentive Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) by offering a 200% weighted income tax expense.
A Natural & Cultural Heritage Restoration Fund should have been set up with a corpus of at least ? 2000 crores which would have restarted tourism post COVID and encouraged sustainable and responsible development around each vertical of adventure tourism & cultural tourism.
Post COVID, there was a requirement for a truly seamless tourist transportation experience by standardising all tourism transportation taxes making them payable at a single point which will facilitate the ease of doing business.
To increase the intensity of high-quality hotel accommodation & Mice Infrastructure in India all hotels & mice venues across the country needed to be tagged as vital social infrastructure. This would have boosted hospitality capex driven demand in the aftermath of the pandemic.
COVID has damaged the travel & tour intermediaries. It was critical to protect the business of Indian travel agents & tour operators and a structured mechanism was required to future secure travel agents’ payments to ensure that security for travel agents & operators’ survival. This was key as Travel agents’ payments to principals are unsecured credit and some form of mechanisms whether escrow or guarantee or underwriting based mechanisms were needed to be in place to ensure that travel agents & tour operators money stays secure.
The recently introduced TCS which has made Indian travel agents globally uncompetitive should have been immediately abolished.
It was important to bring overseas global OTAs operating in India into the tax net of GST and other taxes to have a level playing field with Indian travel agents & tour operators.
There was a need for 100% tax exemption and permission to write back income / TDS/ GST etc to travel agents and tour operators on their transactions when airlines windup or close down. This would have protected them and also Indian consumers.
FAITH Associations were also looking forward to GST policy issues in tourism being addressed.
For post COVID revival it was important to bring down the 18% GST category for hotels to the category of 12% GST. There was a need for providing an option of GST at 12% to restaurants with full set-offs.
With a lot of state taxes on tourism, travel & hospitality at the state level, subsuming of GST on fuel, Interstate transportation taxes, power cess, liquor excise and also property taxes, cess on parking charges needed to be made available as input tax costs.
For revival support, the GST on Tour operators should have been brought down 1.8% with full set offs. Hotels should have been enabled to levy IGST to enable them to give GST credits to Indian corporates who do Interstate events and ensure domestic retention of Indian MICE an utmost necessity post COVID.
Not addressing any of these critical measures in the budget announcement has thrown the industry into a state of shock and deep dismay. The tourism, travel & hospitality industry is battling the worst in century crisis from the impact of COVID 19, a revival from which will not be seen minimum for the next financial year till vaccination is fully undertaken with no observed side effects in all source and destination markets.
FAITH Associations had been vigorously interacting with all Government Stakeholders with the hope to immediately pull Indian tourism out of the COVID recessionary conditions in the crisis of the century for tourism, travel & hospitality.”
Subhash Goyal, Honorary General Secretary-FAITH and President Confederation of Tourism Professionals shared his opinion and said
“1. This was a great opportunity for the Government to revive the Tourism Industry and save at least 30-40 million jobs which are on the verge of extinction out of 75 million people who are directly and indirectly employed in this industry.
2. Not just Tourism, it is no mentioned of the services sector which is the largest employment generator, in this Budget.
3. There are a few good things which may indirectly help the Tourism Industry like more Tourist Coaches and Trains in the Railways. Privatization on the PP basis of Sea Ports may help Cruise Tourism and 35,000 crores on vaccines and increasing medical infrastructure etc. may indirectly help Medical Tourism.
4. Rs.15,700/- crores on MSME may help indirectly to just a few small operators.
5. Privatization of Air India, we have been hearing for the last so many years, unless there is a deadline this may or may not happen.”
There should be implementation deadlines in all Budgets and the previous Budget points that have been implemented should be read out before presenting the new Budget.
Jyoti Mayal, President, Travel Agents Association of India; Vice Chairperson FAITH; Chairperson –THSC; Member Governing Body - FICCI FLO; Member Board - CII National Committee on Tourism & Hospitality share her views on the budget said “The Union Budget 2021 was a big setback. As the President of TAAI & Vice Chairperson of FAITH, I believe the Travel, Tourism, Hospitality industry is totally demoralised & frustrated. Covid19 was unprecedented &beyond protection, resulting in being demotivated & the entire value chain of the industry struggling to survive. The budget for 2021 has gone beyond, playing havoc with the sustenance of the industry. There were huge hopes from the Finance Minister & it has derailed all our revival plans & somehow it feels the FM forgot that the Travel Tourism industry exists & it certainly contribute 9.2% to the GDP & generates 10% of employment. India is the only country globally which ignores direct growth by refusing to acknowledge travel tourism & hospitality.
Support on our requests, which were critical for survival & revival, incentives to revive all aspects of tourism, rebates, protection from defaults& policies to protect the industry, tax free holidays, abolishing of TCS, creating funds for encouraging MICE, SEIS of 10% to all foreign exchange earning members, SEIS for 2020-2021 to be released immediately& most importantly Industry status to be included in the concurrent list & establishment of a National Task Force under the aegis of the Prime Minister would have not only made us strong & resilient but also paved a path for faster, sustainable recovery of the economy &revived the 5 crores looming unemployment, which the government is trying to sustain by increased Capex spending & investment in infrastructure, which is long term.
The Union budget needed to establish more spending for sure, but by investing in to drive stronger domestic tourism to build better infrastructure & ensuring better sustained business environment with credibility, clarity & certainty.”
Pronab Sarkar, President, IATO (Indian Association of Tour Operator) stated “IATO expresses its disappointment on the tourism sector being totally ignored in the Union Budget. The pandemic hit tourism the hardest with Tour Operators staring at almost nil income till date with no immediate revival insight. It is estimated the sector lost about 90,000 crore rupees and more than 5 lakh jobs have been lost. In a scenario like this IATO, the apex tourism body representing the tourism stakeholders expected some succour or relief package like tourism being treated at par with IT sector and enhancement of SEIS (Service Export from India Scheme) incentive from present 7 percent and other measures like allowing input tax credit in GST. None of these have found mention in the budget proposal. According to Mr. Pronab Sarkar, President Indian Association of Tour Operators (IATO) “We express our deep disappointment with the budget as we had high expectations for some relief being given to pandemic hit tourism sector, but not even one of our requests has been acceded. Greater disappointment is since we have a PM who understands the importance of tourism in nation building. In terms of revenue in normal times we earned huge foreign exchange for the government but the sector right now is in huge distress and needs a helping hand. Regret that the government has overlooked all our requests. We hope if not in the budget government through normal announcement it can announce some measure aimed at uplifting our sector”
PP Khanna, President, ADTOI (Association of Domestic Tour Operators of India) said “The budget is very disappointing for the Tourism industry. We were expecting a great budget because COVID has affected the tourism industry badly. Though the budget has a proposal for enhancing Roads, Rail Ports infrastructures and Airports, it will take a long time to implement. If we talk about Dekho Apna Desh, Atmanirbhar, Ek Bharat Shreshth Bharat then we need to take immediate action to showcase India as a ready tourism destination to cater to the tourists. Domestic Tourism which is the only revival and hope for tourism cannot grow without the allocation of funds to Ministry and State tourism Boards. Post COVID industry should have been recognised Post COVID tourism industry would have become mainstay Domestic industry Income tax exemption on travelling Within India and income tax credits for up to 1.5lakhs when spending with GST registered Tour operators within Country. It was required to incentive widely for Mice industry in Domestic.”
With the reaction of the Hotel & Tourism Industry of Odisha on the Union Budget 2021-22, J.K. Mohanty, Chairman – Hotel & Restaurant Association of Odisha & IATO Eastern Region; Co-Chairman – FICCI National Tourism Council / Convenor – CII (Tourism Panel); Member – State Tourism Promotion Council & Tourism Advisory Committee, GoO; Hony. Secretary, Hotel Association of India stated “After listening to the Union Budget 2021-22 announced by Hon’ble Union Finance Minister, not much benefit or incentives are there for the hotels and tourism industry in the country which has been worst affected by Covid 19.
Tourism Industry, which is considered as the 2nd largest contributor to the National GDP and employment growth after IT Sector, (which employs 10% of the total workforce in the country and generates around 9.0% of India's GDP) needs to be supported by the Union Government.
On behalf of Hotel & Restaurant Association of Odisha, we would like to suggest the followings.
Since Hon’ble Prime Minister announced to encourage Domestic Tourism, GST should be waived off for people making domestic travel within the country.
Infrastructure Status : To increase classified quality hotel infrastructure, that would imply a mammoth capital expenditure which can only come from private sector and that requires a long term favourable low interest rate regime as Hotels are projects with long breakeven period. Hotels thus require to be declared as an infrastructure sector so that long term funds are accessible at suitable interest rates to attract private capital hospitality, to create all India jobs and build quality accommodation supply.
Hotels should be charged power rates as applicable to Industries.
Enhancing funding limits to raise the SEIS rates to 10 per cent for hospitality industry and is made applicable on gross foreign exchange earnings for a period of five years to enhance the quality of accommodation and to enable discharging GST liabilities.
Bailout packages to fund and support the salaries in the Tourism and Hospitality Sector that was affected by Covid 19.
GST rates on hospitality should be slashed for at least two or three years, since, currently, large hotels are charged a GST rate of anything between 12 and 18% based on room rate charged. Now that hotels are almost empty, the GST rate should be brought down to 5 or 6%.
Incentivize investments in Infrastructure : A stimulus to investments in tourism infrastructure can provide a major boost to the growth of tourism sector as well as creation of jobs.
There needs to be made an income tax exemption on travelling within India income tax credits for upto Rs. 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country. It is also needed to incentive Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) by offering a 200% weighted income tax expense benefit to Indian companies which are undertaking mice events in India.
Incentivise the Indian corporate for holding meetings & conferences in India with 200% weighted deduction of these as tax expenses against GST invoices.
Incentivise Indian citizens through LTA like income tax benefits for holidaying within India. These could be a deductible expense (for eg of upto INR 1.5 lakhs) against GST invoices.
It is our sincere request to the Hon’ble Finance Minister, Govt. of India to reconsider its decision regarding the Hospitality & Tourism sector of the country and oblige.”
KB. Kachru, VP, Hotel Association of India and Chairman Emeritus & Principal Advisor, South Asia, Radisson Hotel Group shared his opinion and mentioned “Travel and tourism noticeably absent from Budget 2021-22. Industry gets a visible miss yet again will impact GDP if issues are not addressed soon. Today’s budget, like the Finance Minister, said, is a part of the many mini budgets that were presented through the last one year. Broadly speaking, the government has tried to infuse a fresh lease of life into the economy, however for the tourism and hospitality sectors, this is a missed opportunity.
While the six pillars of the Budget presented a diversified approach to fundamentals, focus on the travel and tourism sector is missing, yet again. Our industry is a crucial contributor to India’s GDP and a significant employment generator, key tourism related announcements – an imperative to our survival - were clearly missed. We had certain expectations viz. industry status, rationalization in the tax rate, GST relief, relief for liquidity problems, interest payment restructuring et al, which have been submitted to the ministry on multiple occasions. We expected that there would be some relief for the severely affected small and medium tourism enterprises.
The Union Budget has not provided any helping hand that was expected. We believe there is a long road to travel before the sector ultimately bounces back to its past glory. The pandemic has left a lasting impact on the segment and, the support of the government in recovery is extremely critical. While we welcome the focus on infrastructure that will help in providing thrust to domestic tourism, but no incentive has been provided for people to travel. We expected some tax-deductible relief measures as a policy for Indians to travel within India.
As an industry body, HAI will continue to urge the government to provide short term relief and long-term policy support. We are only hopeful that, even though missing from the budget statement, as the previous year, this year too will see government intervention in the form of policy measures to address the specific bottlenecks to the growth of the sector and help the industry unlock its potential and continue its contribution to the country’s future economic growth.
The industry needs government support without which we fear the impact will be irreversible with unemployment and its impact on millions of livelihoods, potential NPAs owing to lack of financial support and lastly a lasting impact on the country’s GDP in the long run.”
RoopPartap Choudhary, MD, Noor Mahal mentioned "Although the budget has not offered any major relief to the struggling travel and tourism industry, providing Rs 1.15 lakh crore for Railways and privatizing airports, the government has given some aid to domestic tourism. A special impetus to local infrastructure development will definitely encourage domestic hospitality, travel and tourism. The development of road networks across the country gives regional and stand-alone players, at locations considered off the main grid, a fair chance to compete with the main-stream hospitality circuits. Other infrastructure developments in Tier-II cities would assist the growth potential of regional hospitality players and possibly flip the whole scenario in near future.
The industry largely expected a more liberal and reasonable investment and loan framework from the union budget. A more flexible and tolerant financial environment could have supported small hospitality players to explore more growth avenues in these tough times. To encourage guest occupancy, boost domestic travel and help small/independent properties to be more competitive in the market, GST on room bookings should also be reduced from 18% to 10% as government efforts to support the industry on its path to recovery."
While commenting on Medical Tourim Danish Ahmed is the CEO of India's largest medical travel startup Hospals said “Rs 64,180 crore spending plan for healthcare over the next six years in the budget will take India’s health and wellbeing industry to newer heights and attract millions of international patients seeking quality healthcare in India, boosting the promising medical tourism segment. With two COVID-19 vaccines available and two more expected, India can become the torch bearer of COVID vaccination drive on the global stage. By sharing millions of doses of COVID-19 vaccine in South Asia India has already claimed its global leadership in health and wellbeing and is well applauded by superpowers of the world. With the nationwide Covid Vaccination drive, India can also act as a platform for foreign patients seeking COVID vaccination in India encouraging COVID vaccine tourism.”